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4 min read

How to Choose Between Alternative Investment Platforms

How to Choose Between Alternative Investment Platforms

When branching out from traditional investments and looking to alternative investing, there are plenty of alternative investment platforms to choose from. With so many to choose from, finding the best platform is not the easiest task.

Choosing between the best alternative investment platforms requires a bit of forethought and assessment to determine which is the most suitable.

First, a look at the value of alternative investments

If you’re wondering, “what are alternative assets,” you’re not alone. This asset class has been growing in popularity over the years, but not everyone has caught on to this investment opportunity yet.

Luckily, the value of alternative investments is clear. In fact, individuals with the highest net worth aren't simply investing in stocks, bonds, and or any type of mutual fund.

Instead, they grow a large portion of their wealth by creating the most diversified investment strategy. In other words, many of the wealthiest people became such because they are investing in things like cryptocurrency, real estate, precious metals, startups, hedge funds, venture capital opportunities, or even luxury goods.

According to The Motley Fool, individuals with an ultra-high net worth ($30 million and above) tend to hold around 50 percent of their assets in alternative investments. Even further, those allocations are projected to grow in the coming years.

Alternatives often offer growth stability and less volatility, which traditional assets just can't provide. Even more noteworthy, the yields and returns of alternative investments can be larger in some respects. Here are a few tips to help track down the most efficient and profitable alternative investment platform.

1. Focus on alternative investment platforms with flexible opportunities

Whether you have an idea of how you want to begin investing into alternative investment opportunities or you don't yet know, flexibility with the alternative investment platform you choose is important.

You may start out most interested in hedge funds, crypto, or real estate investment, but your portfolio is sure to change as new logical alternative opportunities arise. Because of that, it is helpful if the platform you are already working with is flexible enough to accommodate.

Keep in mind, some platforms specifically work with an investor leaning into certain types of investments, while others have a more open setup for an investor. For example, at Rocket Dollar, you're free to start investing in whatever you want thanks to the BYOD (Bring Your Own Deal) setup. The support team will help you invest in what you want with a Rocket Dollar IRA.

2. Look for a platform with the best support

Alternative investing can be a little intimidating when you are just getting started and have only ever dealt with stocks and bonds. So a good support team and a nice level of support accessibility are critical right from the start to help you navigate into the new territory. Just the same, optimal support is just as important as you do gain familiarity.

Some of the top complaints investors have with specific platforms revolve around lacking support. When you are trusting a platform to handle your assets, you want timely responses when you have a problem or need to speak to someone.

Look at reviews for any platform you are considering, and don't be afraid to do a few "test runs" when it comes to interacting with support as a prospective customer. Contact support, see how long it takes you to get a response. Look at the different lines of communication that will be available and at what times.

3. Ensure the platform has straightforward pricing

Alternative investment platforms can have complicated pricing models, some of which are hard to understand and even a little misleading. When you are going to be working with a platform for the long term, you definitely don't want surprises when it comes to cost.

The last thing any investor wants is to get familiar with a platform only to find a few years into it that their monthly maintenance fees are skyrocketing. That often happens because a platform is going to charge more because they have added more funds.

In general, the best pricing models with alternative investment platforms will be easy-to-understand and pretty much set in stone. For example, you will likely have a setup fee to create the initial account and then a monthly maintenance fee that may be structured into tiers with different levels of service provided.

Familiarize yourself with the fee structure, as well as the terms and conditions related. For instance, make sure the company states up-front that they won't heighten monthly maintenance fees when you accumulate more assets or have more money in your funding account.

4. Go for a platform that makes investment tracking simple

The general recommended allocation for alternative investments is between 10 and 20 percent of a full portfolio. Although, some investment advice is to opt for more substantial percentages.

With that being said, it is definitely more common for there to be different alternative investments that make up that percentage. For example, you may allocate 5 percent to real estate, 10 percent to blockchain and crypto, and another 5 to venture capital.

When debating between alternative investment platforms, you should look at those who make it simple to track these investments. This is especially important if alternative investments are in different classes.

You no doubt want to keep an eye on your investments, and a streamlined tracking tool accessible from just one place simplifies that process. Additionally, this simplifies reporting at the end of the year.

5. Consider how you will fund your account

Lastly, but not least importantly, consider how you plan to fund your investment account. Make sure the platform you are considering offers the options you need now, as well as the funding options that may be important to you down the road.

For example, maybe you only want to fund the investment account now by rolling over your 401k from a previous employer. However, your future intentions may be to add funds directly from your own private funds. Check into funding options on any alternative investment platforms before you commit.

With Rocket Dollar, strategies for alternative investments are not rocket science. The platform offers a flexible, straightforward way to grow your alternative investment portfolio. Best of all, there are no pricing surprises and optimal support for every one of our clients, no matter how many asset types they have.

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